Lecture+19+December+9

Lecture+19+December+9 - Today in Comparative Politics...

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Today in Comparative Politics Impact of democratic political institutions on political outcomes: fiscal decisions Final Exam College Avenue Main Gym Tuesday, December 22 12 to 3 pm Not in Scott 123!
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Majoritarian v . Consensus Democracies Last time: how these two ideals stack up in terms of: Accountability Clarity of Responsibility Mandates Government identifiability Representation Responsiveness Congruence Today: do different democratic political institutions actually produce different outcomes?
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Effect of Institutions on tax rates and levels of government spending Text uses “fiscal policy” in an unusual way. Conventional usage: actions to vary tax rates and public spending for macroeconomic stabilization. E.g., 2009 stimulus bill to help raise GDP and end the recession Focus here is not on dampening the business cycle but on longer term policies regarding: Size of the public sector Degree of income redistribution brought about by the tax system
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Size of public sector varies widely, even across high-income countries Dot : mean share of government in GDP Line : range Bar : ± one standard deviation
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On average government activity has increased, but variance across countries has also grown Same data with countries pooled in each year Dot : mean share of government in GDP Line : range Bar : ± one standard deviation
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What explains persistent cross-national differences in fiscal policy? One possibility: citizens of different countries have different preferences over the best size of the public sector or the appropriate extent of income distribution
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Preferences over redistribution Let’s revisit the Meltzer-Richard model from chapter 9 y i = individual i ’s income Suppose the government taxed everyone at the same rate, so individual i ’s total tax bill is: T i = y i t and suppose the government provided the same subsidy s to every citizen. If an individual’s income
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Lecture+19+December+9 - Today in Comparative Politics...

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